If you’ve been following me on Twitter or Facebook, the reason for this jarring departure in blog content should be no secret by now. Just one last literary tidbit before I return home, and then I’ll have plenty of new stories to share- Involving food and recipes, yes! Thanks for bearing with me and providing such insightful comments all along. To complete this trio of essays, I’ll leave you with a general overview of the less romantic side of the hospitality industry… The expenses and the odds of survival.

Risky Business

It’s a dream shared by many office workers caught up in the drudgery of a thankless job: to leave their thankless positions, open up a restaurant, and share their favorite foods within the community sounds like a gig that’s too good to be true. Unfortunately, in most cases, it is. Restaurants can be the most difficult type of small business to start and become financially successful. It’s been estimated that within the first three years of operation, over 60% of all new restaurants in the US will have already failed and closed. There are many reasons that a restaurant may go under, but some of the most common culprits include the astronomical start up costs, a very competitive market place where big industry still rules, and profit margins that are very slim in the best of situations. It is certainly possible to run a profitable restaurant, as numerous small businesses throughout the country have proven, but that success is hard-won and well deserved. While any small business is a difficult endeavor, restaurants especially pose some of the greatest risks, and least promising returns.

There’s a good reason why restaurateurs frequently solicit investors to help get their concept off the ground, and it has to do with steep cost of turning their ideas into concrete reality. Rental fees for the space itself are just the start, but a prime location can quickly take a big bite out of the budget. A street-front store is more than just convenient; it’s almost like free advertising, since passersby are more likely to notice it and drop by on a whim. The financial hit may be hard to swallow, and other expenses can be taken on slowly, upgrading equipment as is possible, but a location can’t be changed without incurring even greater costs. The equipment, however, is no small expense either. Buying used can save a bit of money, but even the most basic set of tools such as ovens, refrigerators, and pans is liable to set one back between $100,000 – $300,000. That’s presuming that high-end specialty items aren’t needed, like fancy espresso machines or crystal-clear ice cube makers.

Banks are becoming increasingly reluctant to take a gamble and offer loans to newcomers in the restaurant business due to their high rate of failure. A rookie mistake would be to mortgage one’s home; it’s a move doomed to create further money woes in the future, or at the very least, put undue stress on anyone worried about losing it all. It’s important that one be financially stable before quitting one’s day job just so that they can break into the field. On top of the aforementioned start-up costs, don’t forget, there are expensive permits to cover, such as insurance, a liquor license, and food handlers permits for every employee hired. It can add up very quickly. After all that, there’s not even been a mention of the raw materials themselves- The food!

Food prices are at an all-time high all over the globe. Just in the past year, coffee and peanut-butter prices rose 19% and 27%, respectively. No one has been feeling that strain more acutely than those in the restaurant business. Although buying wholesale through specialty purveyors who deal only with restaurants will save money over buying food at retail prices, it’s a constant expense that will always need to be accounted for. Prices rise only higher for organic food, which can be a big selling point these days, but may or may not be worth the investment, depending on one’s customer base. Sometimes menus must be limited due to the costs of certain ingredients, which may spoil the original concepts of some owners. Luxury items like truffles or saffron can add up very quickly on their own, and most customers won’t be willing to make up the difference in the final bill. Immense pressure has been put on restaurateurs to keep costs down and offer affordable meals in this economic environment, so it can be incredibly challenging to formulate a menu that will strike potential consumers as a good deal, and still bring in a profit. On any given check for a full-service restaurant, after factoring in the costs of food, labor, and other incidentals, one can only expect to make between 1.8% to 3.5% profit in most cases. At that rate, it’s easy to see how it could truly take years to merely pay for the start-up costs and break even, let alone actually make a living wage.

Any additional competition added to the restaurant scene can cause strain on even established eateries, but that pressure is tenfold when national chains move in next door. In the race to offer the most affordable options, no one has the market cornered quite like restaurants franchises, and especially fast food establishments. Value menus are a boon to both indiscriminate eaters and the executives that think them up, because chains are able to buy very cheap food at incredible volumes so that each serving will cost them pennies, if that. Almost everything that the customer pays for is pure profit. Healthy food is more expensive, and that can be a deal breaker for some people, which in turn makes competition with these kings of cheap food near impossible for many new eateries, especially quick-serve establishments that fall in about the same category.

As romantic as the notion of opening up a restaurant from scratch may sound, the reality of the endeavor almost never matches up to the dream. The expenses that must be taken care of before the doors are even opened on a new restaurant typically are largely beyond what most newcomers would ever imagine, and are subsequently unprepared to take them on, even with the help of investors. Turning a profit is challenging on a good day, but when paired with the strain of making up those initial costs, most restaurateurs will never see a profits and losses report that is favorable. Add in the pressure of competing with the big boys of powerful, nation-wide chains that offer food at incredibly low prices to hungry consumers, and it’s no wonder that most restaurants can’t even survive their first year in business. It takes an enormous amount of determination, good planning, and a serious dose of luck for anyone to survive in such a hostile industry.

Sharing such a personal story was not easy for me, but I’m delighted and deeply touched by the positive response. Emboldened by that experience, I’d like to continue this writerly tangent, now with something drastically different from my typical content: A persuasive research essay. Groupon seems to have reached its breaking point since the time of the original writing, but it still flounders along, so I feel there are a few things remaining that must be said. Tell me, do you still buy Groupons or other similar online discounts? After reading the piece, was I able to persuade you otherwise?

Disastrous Discounts: Paying the Price for Groupon

Social purchasing is more popular than ever, and new websites offering deep discounts on services ranging from massages to kayaking classes are sprouting up every day. Groupon was arguably the trendsetter, beginning the craze and still drawing the greatest crowds; more than 50 million people subscribe to regular alerts and emails about current deals, and over 22 million Groupon deals have been sold as of January 2011. Most commonly though, the bulk of these prepaid vouchers are for purchasing food in restaurants. Poised as both a painless way to try new cuisines and a money-saving option for revisiting old favorites, it’s easy to see the allure of up to 70% off your receipt’s total. The deals may be booming, but what discount-seeking consumers may not know is that by buying into this trendy coupon game, they may actually be damaging the business they love most. Businesses that see flagging sales are more likely to participate in the first place, and it’s common that those deep discounts actually cut further into their bottom lines. Patrons who seek the cheapest options are unlikely to purchase more than their vouchers are good for, and thus each Groupon is accepted at a loss. Groupon may turn a nice profit from the collaboration since it’s not their merchandise or services on the line, but the small restaurants lose, big time. Whether a business fails or succeeds is entirely in the hands on the consumer, which means that this is one case where individuals can make a difference and vote with their dollars.

Anyone who cares enough to invest in a voucher coupon presumably wants their local eateries to stick around, provide more great deals, and of course the food that makes it all worthwhile. Outsourcing the discounts to a middle man is often the big problem, and one that patrons should ultimately avoid. That’s not to say that all coupons are bad for business owners, but seek instead for deals that come straight from the source. Many casual restaurants and coffee shops in particular already have customer loyalty programs which reward repeat businesses. Ask at the counter, and shoppers may be rewarded with a free beverage or appetizer after a certain number of purchases. It’s a nice bonus for being a regular, and a cost that’s more easily subsidized by the establishment in question.  Managers who don’t employ such a tactic may not have thought of it in the first place, so don’t hesitate to suggest starting up such a program to those not participating. Don’t be afraid to speak up; owners interested in pleasing their customers, and especially their loyal fan base, should be open to suggestions.

If the attraction to Groupon shopping is too great to shake altogether, a single discount deal won’t bankrupt a restaurant, but vouchers shouldn’t be like free meal tickets. Purchase Groupons sparingly and don’t be selfish.  Although Groupon and many similar websites allow users to purchase additional copies of the same deal as “gifts,” limit purchases to one of each offer. Although it’s against the terms of service to cash in “gifts” for oneself, it’s sadly a common practice, as an estimated 50% or more of these Groupon deals are in fact illegally cashed in by the original purchaser.  Additionally, be prepared to spend more than the total value of the deal, since that’s the only way that restaurants can break even. Most importantly, do not forget to tip, and tip well. Waiters and waitresses are often the first to suffer from patrons who abuse the system, and seem unwilling to part with a dime beyond their paper contracts. Tips are not included in these vouchers and there’s no excuse for bad tipping on good service.

Who would intentionally create such a short-sighted business plan, which damages its own sources of revenue? No one, and certainly not any savvy investors; Groupon was not designed to ruin restaurants. There’s good reason why it’s still influential and drawing new supporters, and that’s because for some, it does work the way its intended. When smart discounts and price points are set, proprietors can up-sell items and ultimately make a profit, in spite of the vouchers. What’s more, new customers can be attracted to the low prices at first, but become regulars once they finally try the venue. In a perfect world, this is the ideal outcome of a Groupon for both parties, and while it’s not impossible, it’s becoming increasingly difficult to achieve.

If it seems too good to be true, it probably is. Groupon fits perfectly into that concept, promising much more than it can ever hope to deliver. Although the customers are probably never clued into the damage they do, they hold the key to whether their internet-based vouchers make or break a restaurant in dire straits. Avoiding them altogether and simply supporting your local small businesses is the best tactic, because they need every dollar to stay afloat in these difficult times. The customer really does decide the fate of an establishment with both their fork and their money, so put them somewhere you can trust; not a faceless web-based company, but with the talented, hardworking chefs found right around the corner.

And now, for something completely different: Since I’ve been a bit short on words lately, I wanted to share a few pieces previously written for an English composition class. We were tasked with writing a number of essays, all loosely related in theme. Read on for my memoir submission if you please, or skip away for this week. Bear in mind that this was written in the summer, and turned out to be foreshadowing later events… Your regularly programed recipes and reviews shall resume shortly!

Death of a Dream

Warning signs were everywhere; loud, obnoxiously glaring, aggressively bold, and unavoidable. Yet for weeks upon months, I simply clamped my eyes shut and rammed my fingers in my ears. Operating on the theory that if I don’t acknowledge the problem, then it didn’t exist, I was able to lull myself to sleep at night in a cocoon of ignorance. If only it were so simple.

Scheduled to speak at an organic food festival in NYC on one warm weekend in July, I arrived with too few hours of meaningful rest under my belt and no plan at all. Cookies and cake were baked, and free food is never a hard sell, so I strode blindly into the spotlight, banking on having a hungry audience and not much else. Mercifully, the crowd was abundant and ravenous for information as well as desserts, which led the way to a question and answer session far better than any lecture I could have prepared. The openness and genuine compassion was palpable; things moved right along at a steady clip, without a hitch. So when one innocent, unassuming question caught me off guard, even I was stunned at my response.

“Would you ever think of opening your own bakery?” The words floated out from nowhere at all, the speaker lost in a sea of faces. Final syllables lingered like a steadily growing fog in the air as I paused for an extra beat, deliberating how best to begin. Suddenly, without warning, I had to address the elephant in the kitchen.

From a place far away, seemingly removed from my own body, I heard myself begin to speak. “In some tiny, very quiet corner of my mind, I have this idea that it would be a really fun adventure…” I rambled as I tried to sort out the situation hastily, but the tone changed, my voice began to quake and shiver. I thought of Health in a Hurry, the restaurant that I considered a second home, of Sue Cadwell, my boss, mentor, and inspiration of six years running, and the tidal wave of all the red flags hit me full-force, sweeping me away in the undertow. The truth is, I could never open my own business after witnessing the struggle first hand.

Following the mental trail of breadcrumbs, I pieced together that gruesome puzzle to assess the damages. Months had passed since my last paycheck, and still I showed up for work when called upon. I may make minimum wage, and I may not work more than a day a week during slow times, but certainly I had earned more than the $50 I netted for the previous year of service. Then, there were those slow times themselves to take into consideration: How many business models can survive based on anticipating a total of three customers a day? How do a handful of $1 cookies, made with maple syrup and organic flours pay the electric bills, let alone turn a profit? Then there was the ambiguous threat of unspecified debt that periodically floated into conversations. Whether it was hundreds, thousands, or tens of thousands, only Sue knew for sure, but I didn’t get the sense that it was a minor sum, even in the most optimistic of mindsets.

Barring some incredible, unbelievable miracle, it was hard to imagine that the business could continue clinging to life, just barely scraping by, long enough to see another birthday. I saw my dreams in Sue’s dreams, my own imaginary bakery in her shop. A lovingly tended container garden decorated the scant outdoor space which blended with the parking lot beyond. Inspirational quotes adorned the bright green walls. Every inch of usable space was maximized and used to the fullest; some might call it cluttered, but to us, it was perfectly organized. The passion that went into crafting such an establishment was clear to anyone who ventured in for a meal.

Built on a foundation of organic, local produce, expenses were undeniably higher than most start-ups, and to make those wholesome meals accessible to all, it would be generous to describe the profit margins as slim. Slim to none is more like it. Hidden behind a whole building complex, without money to advertise, who was to even know our humble kitchen even existed? Perhaps the miracle here was that Health in a Hurry survived for so long in this hostile, viciously competitive marketplace.

Sue was far too optimistic to let on the true severity of the situation, but when it all became crystal clear when I caught sight of a long overdue bill. Abandoned on the prep counter and waving periodically in the gentle midday breeze, the temptation to peek was irresistible, and curiosity soon won out over any notions of privacy. I lay down my knife, stalks of celery neatly lined up and ready to be diced, and quickly darted over that mysterious paper. Numbers of unimaginable quantities, all printed in red, burned angrily before my eyes. Each one a tiny fire, together they threatened to engulf the shop in one giant blaze. As if the paper might somehow scald my open palms, I quickly set it back down where I found it, busying myself with work once again as if nothing had happened. I never mentioned the paper to Sue, and she never reported any financial problems to me.

It was immensely painful to sit idly by, watching as this place that is so close to my heart suffered. Like watching a terminally ill friend grow more sick, slowly being drained of life, it was destroying me from the inside out to see the warning signs pile up. Each one pointed to an end of the dream, to Sue’s grand mission to share her food philosophy, and possibly soon. I was deathly afraid to utter such words in front of this eagerly listening crowd, for fear of bringing that resolution even closer to a reality, but this was the harsh truth. Health in a Hurry was in grave danger. There can be great romanticism about the restaurant industry as imagined by the outsider, an idyllic vision of cooking up the dishes you dream about to regulars who love your palate and presentation. The truth is, it’s more than just a fun hobby, and it’s certainly not a game; it’s a business. When the number of dollars going in and out don’t add up, things may just get ugly, rotting from the bottom up until there’s no foundation left to build upon.

Snapping back to the question at hand and the curious faces in the crowd, I could only wonder how much of this I said aloud. The simple fact of the matter is, I was very scared. Scared to death that the only real job I had ever held may soon cease to exist, and that Sue’s dream may in fact fail, after fighting the good fight all this time. No, I could never open my own bakery, or restaurant, or any small business at all.